Addressing Pay Disparities in Massachusetts Healthcare

Now that the Massachusetts House has passed its version of a health cost control bill, lawmakers from the House and Senate will have to iron out their differences. But some policy experts say that one major driver of healthcare costs is not adequately addressed in either version of the measure.

Some teaching hospitals with market clout command higher insurance payments than smaller hospitals for the same procedures and services. That’s a well-documented disparity — and the subject of an investigation by the Massachusetts attorney general’s office. Nancy Turnbull — a health policy expert at Harvard — says one way to reduce healthcare costs is to equalize those payments through government regulation. She says the pending cost-control bills instead leave it largely to market forces — as health plans charge consumers more to go to higher costs providers.

The house bill does suggest some government intervention around price disparities — by recommending what’s being called a luxury tax on the highest paid providers, and by changing the bargaining ability of some large hospital systems . Turnbull — who sits on the Massachusetts health connector board — believes those provisions are too weak to level the playing field. But Hank Porten of the Holyoke Medical Center– which is on the lower end of the payment scale — believes they’re a good start.

Both Porten and Turnbull support rate setting — in which the government directly regulates how much hospitals and providers can charge — an option that is not part of the pending legislation.